Operations Management Chapter 3
Operations Management Chapter 3
Management Chapter 3
PROF. DR. FRANCESCO D. SANDULLI
UNIVERSITY COMPLUTENSE OF MADRID
Operations Management Chapter 3
Capacity
Location
Capacity
► The throughput, or the number of units
a facility can hold, receive, store, or
produce in a period of time
► Determines fixed costs
► Determines if demand will be satisfied
► Three time horizons
https://www.youtube.com/watch?v=8SqnC8ZPgnY
Capacity
Time Horizon
Options for Adjusting Capacity
A B C
Bread Fill
15 sec/sandwich 20 sec/sandwich
Wrap/
Order Toaster
Deliver
30 sec/sandwich 20 sec/sandwich
Bread Fill 37.5 sec/sandwich
15 sec/sandwich 20 sec/sandwich
Capacity Order
Bread
15 sec
Fill
20 sec
Toaster
Wrap/
Deliver
Analysis 30 sec
Bread
15 sec
Fill
20 sec
20 sec
37.5 sec
2. Lost time at the bottleneck represents lost time for the whole
system
3. Increasing the capacity of a non-bottleneck station is a mirage
4. Increasing the capacity of a bottleneck increases the capacity of
the whole system
Queuing Theory
Queuing Theory is the study of waiting lines.
Waiting lines are common situations with an Arrival Queue and a Service Process:
- Airport - Landing airplanes – Air Control Service
- Plant - Entering batches into production workstations – Workstation Process Capacity
- Gas Stations – Cars – Gas bomb
- Supermarkets – Shoppers – Checkout Clerks
- Hospital – Patients – Doctors
- Call center – Phone Calls – Operators
- Bank – Customers – Teller
- Maintenance – Machines – Maintenance Operators
- Harbour – Ships - Docks
SERVICE COSTS
14
Single Channel
1. Arrivals are served on a FIFO basis and every arrival waits to be served regardless of the
length of the queue
2. Arrivals are independent of preceding arrivals but the average number of arrivals does not
change over time
3. Arrivals are described by Poisson distribution and infinite population
4. Service times vary from customer to customer, but average rate is known
5. Service rate is faster than arrival rate
Variables: Users in the queue and system
Lq: Number of users in the
queue
λ=
Arrival Service Time
Rate
EXIT
SERVER
ARRIVALS EXIT
QUEUE SERVER
EXIT
SERVER
19
Multiple Channel (s = Number of servers)
Lq: Number of users in the queue
λ=
Arrival
User being served
Rate
Photocopy Photocopy
Customers arriving to service service Phase 2
one server Phase 1
1 worker 1 worker
makes charges and
photocopie delivers the
s photocopies
λ = 24 customers per
hour
µ = 48 customers per
hour
Example of Queuing Theory Exercise
One Server: M/M/2 with one phase. λ cannot be larger than s (number of servers) x µ. λ =24;
Photocopy
Capacity of the system= 2x30=60/h. service
1 worker makes
photocopies,
Customers arriving to one delivers and
queue but two servers charges
Photocopy service
1 worker making
photocopies, charges
λ = 24 customers per hour and delivers the
µ = 60/2= 30 customers per photocopies
hour
Example of Queuing Theory Exercise
M/M/1
λ = Mean number of arrivals per time period = 24
µ = Mean number of units served per time period. µ must be larger than λ = 48
Ls = Average number of units (customers) in the system (waiting and being served) = λ / (µ-λ) = 24/(48-
24) = 1 customer.
Ws = Average time a unit spends in the system (waiting and being served) = 1/(µ-λ) = 1/(48-24) =
1/24=0.0416hours = 2.5 minutes
Lq = Average number of units (customers) in the queue = λ x Ls /µ = λ2 /µ (µ-λ) = 24x1/48 =0.5
customers
Wq = Average time a unit spends waiting in the queue = Lq / λ = λ /µ (µ-λ) = 0.5/24 = 0.0208333 hours=
1.25mins.
Example of Queuing Theory Exercise
M/M/2
λ = Mean number of arrivals per time period = 24 customers per hour
µ = Mean number of units served per time period = 30 customers per hour
Ls = Average number of units (customers) in the system (waiting and being served) = Lq + λ /µ =
= 0.1523+24/30 = 0.9523 customers in the system
Ws = Average time a unit spends in the system (waiting and being served) = Wq + 1 /µ =
0.006345 + 1/30 = 0.039678 hours = 2.38 mins
Lq = From Table = λ /µ = 24/30 = 0.8 Lq = 0.1523 customers
Wq = Average time a unit spends waiting in the queue = Lq / λ = 0.1523/24=0.006345 hours =
0.38 mins.
ρ = Utilization factor = λ /sµ
Example of Queuing Theory Exercise
M/M/1 M/M/2
Ls 1 0.9523
Lq 0.5 0.1523
Ws 2.5 minutes 2.38 minutes
Wq 1.25 minutes 0.38 minutes
With the new model (M/M/2) the costs of the system increased from 10 euros / server/hour to 15
euros per server and hour. The firm has calculated that the waiting cost in the line per customer is 20
€/ customer/ hour.
Cost of M/M/1 = Cost of the Service + the Cost of the Waiting Times = 10 euros/hour + ( 1.25
minutes x 24 (arrival rate) x 20€/60mins )= 10/hour + 10/hour = 20 euros /hour
Cost of M/M/2 = Cost of the Service + the Cost of the Waiting Times = 15 x 2 (s) + ( 0.38x24x20€/60
= 30 euros/hour + 3.04 euros/hour )= 33.04 euros / hour
Location Decisions
Long-term decisions
Difficult to reverse
Affect fixed & variable costs
Transportation cost
As much as 25% of product price
Plot total cost for each location (Cost on vertical axis, Annual Volume on horizontal axis)
Select location with lowest total cost for expected production volume
Must be above break-even
Location Methods
Center of Gravity:
Place existing locations on a coordinate grid
Grid has arbitrary origin & scale
Maintains relative distances
Calculate X & Y coordinates for ‘center of gravity’
Gives location of distribution center
Minimizes transportation cost
Location Methods
X Coordinate
dix = x coordinate of
d ix Wi
i location i
Cx
Wi Wi = Volume of
i
goods moved to or from
Y Coordinate location i
d iy Wi
i
diy = y coordinate of
Cy
W
i
location i
i